CBDT chairman P C Mody holds review meet on advance tax payment

Staring at a shortfall in direct tax collection, Central Board of Direct Taxes (CBDT) Chairman P C Mody took a meeting of senior tax officials in Mumbai on Tuesday to review collection figures ahead of the deadline of advance tax payment this Friday.

So far the tax department has collected a little less than Rs 8 trillion against the target of Rs 12 trillion for the current financial year.

According to sources, the CBDT has directed principal chief commissioners and chief commissioners to observe major advance taxpayers of the Mumbai region and to provide day-to-day updates to the apex body, besides seek explanation from companies if there is negative advance tax outgo. 

The Mumbai zone is home to 45 of the top 100 companies and is responsible for one-third of direct tax collections.

Advance taxpayers are supposed to make advance payments of 15 per cent of their estimated tax liabilities by June 15, 45 per cent by September 15, 75 per cent by December 15, and the rest by March 15.

However, in the past two-three quarters, the tax department observed increasing cases of shortfall and deferment in advance tax filing. 

Up to December 2018, Rs 3.64 trillion has been collected as advance tax, which is 14.5 per cent higher than the one in the corresponding period last year. 

The growth rate in corporate advance tax collection is 12.5 per cent and that of personal advance tax is 23.8 per cent. Not satisfied with the collection, the CBDT is said to have asked its officials to keep a close watch on the quarterly results of companies. 

Sources say the apex body has been apprised about the status of advance tax payment, as a lot of firms have informally told the department about the payment they are making on March 15. 

The tax department is awaiting the final numbers of advance tax payments as this will clear the air whether the collection target is achievable or not. Sources in I-T indicated there could be the possibility of a shortfall of Rs 10,000-15,000 crore.

Besides, the apex body has taken account of the various measures, especially the tax demand pending before the Commissioner Income-tax Appeals (CIT Appeals). 

“CIT appeals directed to dispose of the appeal cases as per the CBDT’s central action plan (CAP) of 2018-19,” said another source in the know. 

According to the CAP, each region has been asked to achieve the target of disposal of 25 per cent of appeals involving a demand exceeding Rs 10 lakh and above, 90 per cent of appeals involving demand less than Rs 2 lakh and 70 per cent overall. 

The above targets should cumulatively result in a significant increase in disposing of appeals with the CIT and substantially reduce the pending appeals as well as unlock the demand locked therein of about Rs 4.5 trillion, said the CAP.

As of April 2018, the demand involved in appeals with CIT Appeals stood at Rs 6.38 trillion while the demand stayed by appellate tribunals and other courts stood at Rs 87,035 crore.